Driving Public Service Transformation and Innovation through the Invest to Save Fund

This report by the Public Policy Institute for Wales (PPIW) provides advice on how the Welsh Government could use its Invest to Save Fund more strategically to drive transformation and innovation across public services. To address this, we undertook in-house research and convened an expert workshop, bringing together experts in public service innovation, and representatives from Welsh and Scottish governments.

Government finance can play a powerful role in unlocking innovation and driving transformation in public services. The type of finance provided, and the approach to the management of funds, need to be modulated according to the novelty of an idea and the complexity of its implementation.

Different types of funding are needed at different stages of the innovation process. Projects at an earlier stage are better supported by equity or grant funding, while more mature innovations can benefit from repayable finance.

Active fund management plays an important role in addressing barriers to generating and spreading successful innovations, for example, by codifying the knowledge of innovators and fostering a positive competitive environment between public sector organisations.

Our report outlines a number of ways the Welsh Government could adapt the operation of the Invest to Save Fund without losing the impact it has already had. It recommends that there would be value in segmenting the fund on the basis of the type of change being supported:

  • For proven ideas, the fund could stimulate demand through actively identifying organisations that can benefit and offering finance to take up the innovation.
  • For more novel and complex ideas, the fund could play an active role in supporting the development and testing of innovations, although some form of cross-subsidisation would be needed to ensure sustainability of the fund.